I'm loosing my mind. Everyone keeps saying that if you claim "0" on your w-4 form you will have more withholdings taken out of your check. Doesn't this make you "exempt" from tax?
Meaning that there will be no state and federal income tax withholdings tooken out, you'll just have your social security and medicare tooken out.
What is the difference between putting the "0" on that form or just writing "EXEMPT" on the line?
2006-10-23 10:28:54 · 10 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Ok, I get it now. 0 = max amount of witholdings, and exempt=no fed. and state witholdings. Thanks for all your great awnsers, I really appreciate it!
2006-10-23 13:30:07 · update #1
When the payroll tax is computed the number of exemptions is multiplied by a fixed amount and this is subtracted from your pay. The tax is then computed on the balance. When you put zero you are subtracting nothing and paying tax on the full amount. Exempt is taking out no tax and there are certain requirements such as no tax last year and you expect to pay no tax this year.
Deductions are what you put on your 1040 and does not have to be the same as the W4.
2006-10-23 10:35:29 · answer #1 · answered by Barkley Hound 7 · 1⤊ 0⤋
Ok, when you put a 0 on your w-4, they take out enough taxes as if you were filing single with no dependents. The more numbers you add (claim 1,2,etc) on your w-4, the less federal taxes they take out because you are saying you will have that many personal exemption deductions on your tax return. This would mean you would owe less tax so they withhold less federal tax. Claiming "exempt" on your w-4 means you will not make enough to have to file, so they don't take any out. See www.irs.gov for all of the rules about filing "exempt". You might want to check the instructions for the w-4 on that website. Hope that helps.
2006-10-23 17:36:25 · answer #2 · answered by Dana B 2 · 0⤊ 0⤋
You would enter "0" for your dependants. As for exempt, this is a special bracket that means you are not required to pay taxes. You could write that, (they may ask for proof), but you would pay no taxes from you check. You would however have to pay them at the end of the year. Witholdings are the dollar amount you want taken out of your check every week. You can enter a dollar amount, allowing IRS to keep your money for you until refund time.
2006-10-23 17:48:51 · answer #3 · answered by nonametomention 3 · 0⤊ 0⤋
NO. The "0" is your number of exemptions. If you fill out the worksheet on the top of the w-4 it will guide you as to the proper number of exemptions. Basically, you get one exemption for yourself and one for each dependant (it really isn't that simple, but I do not have space to explain it thoroughly).
If you write EXEMPT it means you are exempt from taxes completely. You will have the same result as to Federal and state taxes if you write 99 on the line. No taxes are taken out.
Think of it this way: The more exemptions you have, the more likely you are to be exempt from taxes.
Make sense?
2006-10-23 18:53:21 · answer #4 · answered by bride2be091507 2 · 0⤊ 0⤋
If you put 0 on the line the employer will withhold the maximum federal and state income tax withholding from you pay. If you put exempt on the line the employer will not withhold any federal or state income tax from your pay.
Exempt is used when you did not earn enough to pay any income tax last year and where you don't expect to earn enough to pay any income tax this year
If you put exempt and do own income tax then you could be assessed a penalty for failure to pay income taxes through withholding or quarterly estimated tax payments.
2006-10-23 17:41:19 · answer #5 · answered by waggy_33 6 · 0⤊ 0⤋
Claiming 0 throughout the year on W-4's will cause the government to withhold more money from your check. This is because if you don't have dependents then you will owe more money. The number is how many dependents you are claiming including yourself.
Exempt means you don't have to pay taxes. I'm not sure how to be eligible for this but I don't know anyone who this applies to.
I personally claim one less throughout the year than I claim on my tax return. I have found that they take enough money at the federal level but not at the state level. This insures that I have paid enough throughout the year that I won't owe at tax return time.
2006-10-23 17:41:25 · answer #6 · answered by ? 4 · 0⤊ 0⤋
By claiming zero, the highest amount of tax will be withheld from your pay.
Claiming exempt will have no Federal Income tax withheld
2006-10-23 17:32:30 · answer #7 · answered by RamsGod 3 · 0⤊ 0⤋
By claiming zero, the highest amount of tax will be withheld from your pay.
Claiming exempt will have no Federal Income tax withheld--but most companies won't do that because of potential that they could be held liable for taxes they should've withheld but didn't
2006-10-23 17:51:41 · answer #8 · answered by Dwight D J 5 · 0⤊ 1⤋
THE DIFFERENCE IS THAT IF YOU CLAIM 1 OR NONE, YOU WILL GET SOME MONEY BACK, BUT IF YOU CLAIM EXEMPT, YOU WILL HAVE TO PAY TAXES AT THE END OF THE YEAR..
2006-10-23 17:33:35 · answer #9 · answered by sneakysteph22 2 · 0⤊ 2⤋
The more deductions you claim, the less they will take out of your check. You claimed "O" deductions, so they will take out the most money.
2006-10-23 17:41:05 · answer #10 · answered by JaneDivided 4 · 0⤊ 0⤋